N. David Milder718-805-9507

www.ndavidmilder.comdmilder@gmail.com

Presented to

The 7 Rivers Alliance’s Revitalize Storefronts ConferenceCashton WI

November 19, 2015 © N. David Milder. All Rights Reserved

Some Strategies for Small Town Downtown Revitalization

Strategies to be discussed:

1. Developing and strengthening your downtown’s Central Social District (CSD) functions, especially the entertainment niche

2. Attracting new residents who either do not need jobs, will bring their jobs with them or can create their own good jobs.

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In the New Normal for Downtowns…

CENTRAL SOCIAL DISTRICT (CSD) FUNCTIONS

ARE OFTEN BECOMING MORE IMPORTANT

THAN CBD FUNCTIONS, e.g., retail and offices

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Your CSD is…

The downtown area with activity venues that facilitate people having enjoyable experiences with other people, usually relatives and friends, but, importantly, sometimes strangers.

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Some CSD Components: (EN = entertainment niche)

Movie theaters (EN) PACs (EN) Concert Halls(EN) Museums (EN) Art galleries (EN) Arenas (EN) Stadiums (EN) Senior centers,

community centers (EN) Pamper niche venues

(gyms, nail & hair salons)

Restaurants and drinking places (EN)

Parks/public spaces (EN) Ice cream parlors; pizza,

hot dog, sausage joints (EN)

Places of worship Social clubs, (EN) Catering halls (EN) Public markets (EN) Schools

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An entertainment niche is a subset of the CSD. Three of its components should be given top priority:

Restaurants and drinking places

Parks and Public Spaces

Movie Theaters

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Restaurants and drinking places are vital social amenities and they can make it in small WI towns

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Here’s why…

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Here’s why 2…

Relatively low market share needs to be won to be viable

Relatively low rent and labor costs They now account for about 13% of the

annual sales in WI small downtowns – more viable than most GAFO retail

We are now spending more on eating out than on eating at home

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Biggest restaurant challenges in small towns…

Small market area low revenue potentials Low revenue potentials quality restaurant

operators and chefs probably will NOT be attracted from the outside

High quality needed to draw customers from a larger market area

Nationally, strong growth skilled kitchen staff now harder to find

HOW CAN QUALITY BE IMPROVED?

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Parks and public spaces are often far better strategic choices than formal entertainment venues* because they …Are usually much cheaper to buildAre much cheaper to operate and

maintainDraw many more visitorsHave far fewer user frictions

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*PACs, theaters, museums, arenas, stadiums, convention centers

Some relevant data…

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Mitchell Park in Greenport, NY – year round population 2,200

Has a strong flow of tourists in season (many shops close in winter)

The park has an antique carrousel, marina and winter skating rink on a waterfront location

Cost about $14.9 million to build

Costs about $1 million/yr to operate. Most of the costs are covered by user fees

Reportedly gets about 390,000 visitors/yr

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Division Street Plaza in Somerville,

NJ – population 12,100 Basically a 1-block long

successful pedestrian mall. Unusual because about 90% of them have failed

Cost about $675,000 to create

Costs about $62,500/yr to operate

Annually businesses are attracting 116,000 to 128,000 patrons and events are attracting about 100,00 visitors

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Grand Central Plaza in Valparaiso, IN – population 32,000

Park with amphitheater, ice rink and catering facility

Cost about $3.25 million to build Phase 1; $4 million for new addition

2014 operating costs about $460,000/yr; $100,000 by city; $360,000 by Valparaiso Events

Had about 130,000 visitors in 2014

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The types of organizations that made these projects happen… Greenport’s Mitchell Park: the Village

government Somerville’s Division Street Plaza: the Town

government, but mostly the BID Valparaiso’s Grand Central Plaza: City

government and downtown biz group nonprofit

Local government action is essential – those that provide for-a-fee business-like services are more likely to succeed.

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How are they financed? In many ways… Greenport’s Mitchell Park: operations covered mostly

by user fees. Village spent about $4 million on its development, rest came from 25+ grants and donations.

Somerville’s Division Street Plaza: the Town government handles physical maintenance, the BID covers events, marketing, sanitation. Initial construction covered by Federal transportation program funds

Valparaiso’s Grand Central Plaza: City government handles physical maintenance; sold naming rights covers most of it. Downtown biz group applies user fees and sponsorship funds to pay for events and marketing. Private donations and TIF funds covered $4 million expansion. TIF funds and state and Federal grants covered most of Phase 1’s construction costs.

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Downtown movie theaters are treasures, but under constant threat

They draw about 50,000 patrons/yr/screen

They are affordable They are open

days/evenings/weekends They have relatively few

user frictions But, they provide a small part

of movie studio revenues The marketing platform they

provide is what is keeping the studios connected

Most movies are watched at home – cinema attendance down.

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A closed cinema is a terrible loss!

The challenge is to keep the cinemas you have open, vibrant and profitable

New small town cinemas impossible to get! Recently, in crossing the “digital divide,” many

communities devised viable strategies for saving their theaters: Crowdfunding Community owned businesses Creating opportunities for patrons to make a “night

a night of it” by tie-ins with nearby eateries and improved public spaces

A viable rescue plan should be ready to go.N. David Milder 19

THE JOBS PROBLEM (Not Steve)

Focus More on Attracting and Supporting People, Less on Big Firms With Putative Jobs

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Meta Strategy for Overcoming Small Town Sparsely Populated and Resourced Market Areas: Tap Denser & Richer Distant Areas

1. Tourism

2. Using the Internet For More Customers For Better Employment

Opportunities For Education and Health Services

3. Attracting New Residents From Urban and Suburban Areas

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The Pivotal Economic Challenge

In our review of the literature, access to good jobs was seen as the pivotal economic problem of small and rural communities

Without good jobs, people will neither want to stay in or move to these communities

The favorite strategic response seemed to be, based on a cluster analysis, to try to recruit outside firms that can bring in lots of jobs

This strategy, too often, has high costs, a low ROI and will fail too many small towns.

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While most American adults do not want to live in a rural area, a very significant percentage do!

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Extrapolating from the Trulia survey data…

About 61 million American adults prefer living in rural areas

That’s greater than the entire population of the UK or Italy

About 15.5 million American adults would like to live in a rural area, but now don’t

That’s greater than the entire population of Greece, Hungary or Sweden.

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Don’t count any age group out The preference for living in the suburbs and

countryside over urban areas is strongest among Baby Boomers (seniors) and Gen Xers. They also have the most money!!!

But, even most Millennials now want to live in burbs and small towns. Also, 26% see themselves as rural or small town folks

Many urban Millennials can be expected to move as the marry and have children – and as rural and small town opportunities increase.

“Although there continues to be an outflow of young people up to 34 years old, rural Wisconsin experienced an increase of people 35-54 yrs old.”

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My attempt at a quick rural small town residential locational assets and liabilities assessment

Probable Assets Lower housing costs Neighborhood safety Parks and recreation

opportunities

Probable Liabilities Proximity to workplace Proximity to good jobs Health care services Quality of housing stock Proximity to shopping and

entertainment Education opportunities

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It depends…

• Lower cost of living• Community character, ambience, attractiveness • Walkability• Broadband

To penetrate this pro rural- small town market segment, a town needs…

Job opportunities – But, now in rural Wisconsin, job opportunities are about 10% less than elsewhere; wages are more than 25% less. (Rural Wisconsin Today 2013)

Attractive, affordable housing “Over one-quarter of all housing units in rural Wisconsin were built since 1990, a slightly higher percentage than Wisconsin as a whole and the United States.” (RWT 2014)

Good quality of life amenities (schools, viable Main Streets, attractive parks and public spaces, scenic views, low crime, etc.)

Adequate health care services An adequate broadband pipe (critical for job creation, health

care, education, entertainment).

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Health care services are especially important for seniors

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SCRMC Clinic in Frederic WI

Some Data on Housing Cost AdvantagesAccording to a recent Urban Land article Millennial owners paid on average for new homes: In newer suburbs: $356,604 In city downtowns: $337,232 The lowest average was $146,947 in rural

areas.

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One solution: Attract residents who do not need jobs, e.g.,… Seniors with ample retirement incomes

The 50+ age segment is 100 million strong, growing. They control 70% of the nation’s disposable income.

Gering NE is attracting retired ranchers and farmers. Many of its tourists are good residential prospects

Seymour NE has attracted retired former residents Meredith NH is seeing second home owners turn into

full-time residents as they retire Adequate healthcare services are critical

Second home owners Feasible if big metro area is within a 2.5 to 3.0 hr

drive; creatives big potential market segment

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Senior Living in Gering NE

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Another solution: Attract new residents who will bring their jobs with them Many denizens of Kotkin’s “Valhallas” (Aspen, Jackson Hole) Those in Central VT working in website design and services;

graphics services; managing investment funds; business consulting with bosses/clients in other parts of the nation

Those with businesses and jobs that are “location free” and rely heavily on electronic communications. For example: A leather specialist who repairs well known handbags (e.g.,

Coach, Longchamps, Kate Spade, etc.) for web customers; another web-based repairer focuses on Birkenstocks

A web retailer of reenactors clothing Andrew Dane and I work on projects and co-author articles

though we live about 1,000 miles apart; my webmaster is 250 miles away; I have clients in CA, OR, AZ, NH, VT, WI

Needed: decent Internet pipe, UPS/Fedex, good highway.

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James Townsend & Son in Pierceton, IN – 33 miles from Ft Wayne

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Solution 3: Attract people who will create their own jobs Rebooting Seniors –

many seniors want new careers to keep busy & augment income

Freelancers/Contingent Workers – always recreating their jobs

Creatives looking for a slower pace and more rustic environment (many are freelancers)

Some will do hobby related work in arts, crafts, etc.

Some will open restaurants, bars, hotels, retail shops

Some will seek new telecommuting based work assignments

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Four “creatives’ from Brooklyn developed The Graham & Co. motel in Upstate NY

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Why contingent/freelance workers and the self-employed are critical

They are steadily growing in number nationally, One GAO estimate (using a broad definition consistent with the title of this slide) puts it at 40% of the workforce in 2010.

In WI: “(F)rom 2000 to 2010, rural wage and salary jobs decreased by over 22,000 (-2.6%). Conversely, there was a significant jump in self-employment jobs, well over 45,000 (+ 18.7%)….” (RWT 2013)

Can the “economic gardening” of the contingents/freelancers/self-employed have more impact than a cluster based business recruitment effort? N. David Milder 36

Better Use of the Internet Early hopes that the Internet would make

more businesses “location free” -- and better able to thrive in rural locations by tapping urban markets and jobs – are far from being fully realized Many areas had no or poor broadband access Too many small business people have not known how to

effectively use the Internet – changing as youths age Powerful web-based job training, telepharmacy,

telemedicine, freelancer job marts (e.g., Freelancer, Elance, Upwork, Flexjobs), fundraising programs were either not developed or not quickly enough

This is changing, but the pace of change must increase.

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Is there a rural “creatives/knowledge workers” problem? There is a lot of malarkey about the value of young

creative hipsters and urban preferences of all creatives Most creatives in NJ, for example, are “mature” and live

in the suburbs, not urban cities. “The percentage of rural Wisconsin residents age 25

years and older with at least a bachelors’ degree has almost tripled from 6.7 percent in 1970 to 18.7 percent today.” (RWT 2014)

Rural towns with the needed assets can and do attract creatives! For decades, we’ve seen many creatives in numerous rural places in NY, NH, VT, MA

Beautiful scenery and attractive Main Streets/CSDs help If they visit, they’re more likely to become residents.

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Addendum

The financial tool box available for small town downtown revitalization has loads of tools proven in small communities. See our article:

Milder, N. David, and Andrew Dane. “Some More Thoughts on the Economic Revitalization of Small Town Downtowns: Financial Tools.” Economic Development Journal of Canada, November 2014. http://tinyurl.com/qcbnefh

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